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Profit from smart mistakes

WS talks to Home Depot co-founder Kenneth Langone

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in Leaders & Managers,Office Management

In June 1978 Ken Langone and two partners launched Home Depot. Today, they’ve built a retail empire.

With revenues of $26 billion and projected after-tax profits of about $1 billion this year, Langone, age 61, modestly insists the whole enterprise of nearly 600 superstores came about as a result of common sense.

In this interview with Working Smart, Langone discusses how to manage people in a service business when millions of customers wander the aisles of the stores asking for help.

WS: When customers go to Home Depot, they usually need help. How do you train thousands of employees to handle the multitude of questions they get from shoppers?

Langone: It’s the kind of business where you have to let salespeople be themselves. I can’t tell them what to say or how to act. Why put a burden on people to make their jobs harder? One of the reasons we’re successful is that we don’t make up a lot of bureaucratic rules.

WS: But without sufficient rules, don’t you worry that some employees won’t know how to respond to customers’ needs?

Langone: My main concern is that employees think for themselves. We want to encourage them to be creative, to take chances in an effort to please the customer. We can train them on products and such, but we can’t train them to take intelligent risks. And we can’t always tell them what to say.

WS: So how do you encourage your staff to think independently when it means that they might be proved wrong? It’s probably easier for them to keep quiet and protect their jobs.

Langone: Today, keeping quiet will actually endanger your job because your co-workers are going to pass you by with their initiative. The best way to protect your job is to speak up, to make what I call “good mistakes.” Taking drugs on the job—that’s a dumb mistake. A smart mistake is trying out a new idea that brings people into the store and increases sales.

WS: Let’s say an employee makes a good mistake. What happens next?

Langone: If he’s wrong, you don’t want to cast him into Siberia. You want to look at what happened and learn from it in a positive manner. It’s really a matter of the culture you create within your organization, a culture that says, “It’s OK to be wrong.”

WS: As the boss, how do you deal with mistakes? Don’t you get fed up?

Langone: Of course I do. It’s hard to accept when people are wrong all the time, but you learn it’s in everyone’s best interest to do so. At the same time, when you respond to others’ mistakes well, they’ll be more honest with you about how you’re running things. My partners and I all share the same philosophy: We want people to express themselves and tell us when we screw up.

WS: Given your diverse work force, how can you drill home that philosophy to so many people with different outlooks?

Langone: We tell them it’s OK to be themselves. We’re all different, period. My wife has blond hair; I have no hair. That doesn’t make her a better or a worse person. It makes her a blond and me a bald guy.

WS: How do you hire the kind of individuals who won’t be afraid of making smart mistakes?

Langone: It’s not easy. A lot of people have this bureaucratic mentality that keeps them from thinking creatively. They’re trained not to rock the boat in school. Tragically, the nation’s employers are filled with too many politicians and not enough business people. We look for people who will think and then take action.

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